Carbon Productivity Analysis to Address Global Climate ...
Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
Carbon Productivity Analysis to Address Global Climate Change He Jiankun, Su Mingshan Research Center for Contemporary Management, Tsinghua University, Beijing 10084, China
Abstract: Developing low-carbon economy and enhancing carbon productivity are basic approaches to coordinating economic development and protecting global environment, which are also the major ways to address climate change under the framework of sustainable development. In this paper, the authors analyze the annual rate of carbon productivity growth, the differences of carbon productivity of different countries, and the factors for enhancing carbon productivity. Consequently, the authors clarify their viewpoint that the annual rate of carbon productivity growth can be used to weigh the efforts that a country takes to address climate change, and propose policies and suggestions on promoting carbon production.
Key words: carbon productivity, annual rate of carbon productivity growth, global climate change, greenhouse gas reduction
It has been gradually recognized by the scientific community that anthropogenic greenhouse gas emission causes global climate change (Solomon, 2007). The core of dealing with climate change is to reduce anthropogenic greenhouse gas emission, and the key is to reduce fossil fuel consumption and CO2 emission caused by deforestation. Currently, the world economic development, especially the industrialization and urbanization of developing countries, consumes much fossil fuel and discharge a large amount of CO2, which is in sharp contradiction to the objectives of addressing global climate change. The fundamental way of coordinating economic development and protecting the climate lies in technological innovation, developing low-carbon energy technologies, transforming economic development mode, and developing low-carbon economy, through which we can achieve the objectives of sustainable development and win-win goals, such as promoting economic development, social progress and environmental protection.
1 The analysis on the rate of carbon productivity growth The core of a low-carbon economy is to raise carbon
productivity. When the situation of dealing with global climate change is increasingly urgent, the carbon emission space has become a more scarce production factor than labor force, capital, land and other natural resources. A substantial increase in carbon productivity has become a key to address global climate change under the framework of sustainable development.
1.1 Theoretical analysis on the rate of carbon productivity growth Carbon productivity is defined as the specific value of Gross Domestic Product (GDP) to carbon dioxide emission over the same period, and it is equal to the reciprocal of carbon emission intensity of per unit of GDP (Kaya and Yokobori, 1999), and it reflects the economic benefits yielding from per unit of carbon dioxide emission. The rate of carbon productivity growth can be used to weigh the efforts that a country or region takes to address climate change and the effect of these efforts (He, et al, 2009). The concept of carbon productivity was put forward by the Kaya and Yokobori in 1993 (Kaya and Yokobori, 1999). In recent years, many researchers are concerned with the relationship between the total carbon dioxide emission and carbon productivity. Beinhocker and other researchers have studied the growth of carbon productivity in order to achieve the goal that, in 2050, carbon dioxide emission can decrease by 50% of 2005 (Beinhocker, et al, 2008). Based on the analysis on carbon productivity and other factors, Blair and the Climate Group put forward some suggestions to deal with the predicament of addressing the global climate change (Blair and the Climate Group, 2008). Under the framework of sustainable development, the key of addressing climate change is to increase carbon productivity, i.e. the annual rate of carbon productivity growth, which is regarded as an important factor weighing the efforts that a country or a region makes to deal with climate change and the effect of these efforts. The annual rate of carbon productivity (γ) can be defined with the following
Received 24 November 2010; accepted 7 December 2010 Corresponding author: He Jiankun (hejk@mail. tsinghua. edu. cn)
Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
velopment.
formula:
J
'Pc Pc
ª Y (1 D ) Y º « Q(1 E ) Q » ¬ ¼
Y Q
(1)
In this formula, ΔPc refers to the increment of carbon productivity of a certain year; Pc stands for the carbon productivity of the previous year; Y represents the GDP of the previous year; Q is the quantity of carbon dioxide emission of the previous year; α is the annual growth rate of GDP to the previous year; β stands for the rate of carbon emission reduction of the year. Because the rate of carbon emission reduction of two adjacent years is only several per cent and it is far smaller than 1, according to formula (1), we have:
J
DE |D E 1 E
(2)
Under normal circumstances, the annual rate of carbon productivity growth can be expressed as the result of summing up the growth rate of GDP and the annual rate of carbon emission reduction, as we can see from formula (2). The economics implication of it is to reduce carbon dioxide emission by advancing carbon productivity; the annual rate of carbon productivity growth shall first offset the increase of carbon dioxide emission caused by GDP growth and then reduce the current level of carbon dioxide emission (He, et al, 2009). According to the previous economics implication, because developing countries and developed countries are in different development stages, they have different problems, difficulties, priorities and measures upon addressing climate change. Newly emerging developing countries are in the rapid development stages of industrialization and urbanization and their GDP grows at a faster rate, so the increase of their carbon productivity should first offset or relieve the carbon dioxide emission caused by new energy demand because of the rapid economic development. The main measures of it are to transform the economic development mode, strengthen technical innovation, and develop low-carbon economy. As for developed countries, they have a high level of economic development and per capita energy consumption and their GDP growth rate is low, so the increase of their carbon productivity should mainly reduce the current high level of carbon dioxide emission. The measure of it is to change their luxury consumption patterns and thus significantly reduce their carbon dioxide emission, when ensuring a high economic and social de-
10
1.2 Empirical analysis on the rate of carbon productivity growth Based on the theoretical analysis on the rate of carbon productivity growth, we calculate and analyze the data of China and that of Annex I countries from 1990 to 2005. In the calculation process, we adopt the data from IEA database (International Energy Agency, 2008). Fig. 1 compares the annual rate of carbon productivity growth of China from 1990 to 2005 and that of countries listed in the Annex I of Global Framework Convention on Climate Change (United Nations Climate Change Secretariat, 2008). Calculating on the data from IEA database (International Energy Agency, 2008), the annual rate of carbon productivity of China from 1990 to 2005 is as high as 4.6%, but due to a rapid growth rate of GDP, which is about 10.1% on average, the carbon dioxide emission increases by 5.4% on average. In the same period, the annual rate of carbon productivity growth of countries listed in Annex I is 2.0%, and their annual growth rate of GDP is 2.3% on average, so the carbon productivity is not enough to offset the increased carbon emission caused by economic development, and the carbon dioxide emission of energy consumption still increase at an annual average rate of 0.3%. The carbon emission reduction of developed countries is still far from the objectives stipulated in Kyoto Protocol (United Nations Climate Change Secretariat, 2008). Developed countries should first significantly reduce their carbon emissions according to the requirements stipulated in United Nations Framework Convention on Climate Change and Kyoto Protocol. Therefore, their carbon productivity must be enhanced significantly. 6% 4% γ:4.6%
2% 0% −2% −4%
GDP Growth rate 10.1%
GDP Growth rate 2.3%
γ:2.0% China
Annex I Countries CO2Emission Reduction rate −5.4%
CO2Emission Reduction rate −0.2%
−6%
Fig. 1 Comparison between China’s carbon productivity and that of Annex I countries from 1990 to 2005
Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
2 Comparative analysis on carbon productivity of different countries 2.1 Factor analysis on carbon productivity Generally speaking, the level of carbon productivity of a country is closely related to its degree of modernization, and the level of carbon productivity of most developing countries is lower than that of developed countries. Fig. 2 depicts that in 2005, the carbon productivity of India, Brazil and China is significantly lower than that of Japan, Britain and Germany. In 2005, the carbon productivity of China is only one fifth of the average level of Annex I countries, and one twelfth of that of Japan, which is a comprehensive reflection of a series of factors that China’s overall level of energy technology is relatively low, that China is at the low-end of international industry value chain, and that the proportion of heavy chemical industry is rather high. For developing countries that are in the stage of industrialization and urbanization, these factors can hardly be shaken off in a short period of time. 2005 Carbon productivity (year of 2000 $/kg CO2) 1990-2005 Average rate of carbon productivity growth
5%
5
4%
4
3%
3
2% 1%
2
0%
1 0
−1% China
Brazil
Japan
India
Britain
U.S.A.
−2% Germany Whole World
Fig. 2 Comparison of some countries’ carbon productivity and the comparison of some countries’ annual rate of carbon productivity from 1990 to 2005
The carbon productivity of China is far lower than that of developed countries, which is closely related to the characteristics of China’s national condition and development stage. Many factors contribute to this condition. Firstly, in China’s industrial structure, the secondary industry accounts for as much as 50 per cent and the tertiary industry accounts for only 40%; while in developed countries, the percentage of the secondary industry is less than 30, and the tertiary industry accounts for as much as 70 per cent; the energy consumption of per unit of added value of the secondary industry is much higher than that of the tertiary industry. Secondly, the rate of added value
of products in manufacturing industry is relatively low. According to calculation, the rate of added value of products in China is lower than that in developed countries by about 20 per cent. In China, low-end products take up a bigger proportion and the energy consumption of per unit of added value is high. Thirdly, the unit consumption of energy for major energy-consuming products in China is higher than that in developed countries by 15 to 30 per cent; the rate of energy conversion and utilization in China is lower than that in developed countries by more than 20 per cent. Fourthly, the energy structure of China is coal-dominated; the carbon dioxide emission factors of unit energy consumption in China are higher than that in developed countries by one third. In the above mentioned factors that result in a lower carbon productivity in China than that in developed countries, the influence of technological gap is much smaller than that of structural factors which reflect the characteristics of the development stage. Obviously, on one hand, China has great potential in improving her carbon productivity; on the other hand, there is still a long way to go for China to reach the level of carbon productivity of developed countries, which is the same with the fact that narrowing the gap with developed countries on economic development is a long and arduous task for China. Although China’s carbon productivity is low, yet her average annual rate of carbon productivity growth is far higher than that of developed countries (See Fig. 2). Meanwhile, from 1990 to 2005, the annual growth rate of China’s carbon productivity not only is higher than that of some newly emerged economic entities, such as India and Brazil, but also is obviously higher than the average level of the world, which is also a reflection of the results of her long-term strategies on sustainable development. Developing low-carbon economy and substantially increasing the carbon productivity is the key for China to coordinate economic development and the climate change, is the internal demand for China to solve the bottleneck restrict on energy resources and domestic environmental capacity, to ensure energy supply security, and to achieve a cohesive and sustainable development on energy, environment and economy, and is a strong driving force for China to fundamentally transform her economic development mode. The policies on addressing climate change, with increasing carbon productivity at the core, are consistent with China’s basic national policies on the conservation of resources and environmental protection, and they
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Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
also fit into China’s objectives on building a resourcesaving and environment-friendly society. So far, China has made great efforts on addressing climate change, which is a concrete exhibition of China as a responsible country, and which has also been praised by the international community.
2.2 Development momentum of carbon productivity According to China’s actual situation and the world situation to address global climate change, China has developed strategies to address climate change under the framework of sustainable development (Chinese Government, 2008; He and Liu, 2005; He, et al, 2007 ). In the future, China will make further efforts to deal with climate change, and will achieve remarkable results. In He, et al (2009), the scenario analysis on future economic development and energy consumption and CO2 emissions shows that, from 2005 to 2020, the growth rate of carbon productivity will reach 4.8 per cent, and approximately the growth rate of 2020 will be two times of that of 2005. The GDP will remain at a high growth rate of 7.8 per cent, the annual growth rate of CO2 emission will reach 3.0 percent, but the growth rate of CO2 emission will be less than 40 per cent of GDP growth rate. To achieve the goal of controlling global greenhouse gas intensity, in the second commitment period after 2012, developed countries must significantly reduce their carbon emission. World public opinion requires that, by 2020, Annex I countries should reduce their carbon emission by at least 25 to 40 per cent of 1990. If, by 2020, the Annex I countries reduce their carbon emission by 30 per cent of 2005, if their annual reduction rate is 2.3 per cent, and if, in 6% 5% 4% γ:4.8%
2%
GDP Growth rate 1% 7.8% 0%
−2% −3%
3 Factor decomposition on the way of enhancing carbon productivity and the estimation on the contribution rate of different factors 3.1 Factor decomposition on the way of enhancing carbon productivity The major way of enhancing carbon productivity is to transform the economic development mode, enhance energy efficiency and develop low-carbon energy technology. According to the definition of carbon productivity, we have: Pc
CO2 Emission Reduction rate 2.3% China
Annex I Countries CO2 Emission Reduction rate −2.4%
1 I gc I ec
U I u I ec
(3)
In this formula, Igc equals to Iu/ρ, and it is the energy intensity of per unit of GDP; Iu refers to the useful energy demand of per unit of GDP; ρ stands for the effectiveness of energy system; Iec refers to the CO2 emission factors of per unit of energy consumption; if λ, μ and ν respectively represent the annual decline rate of the demand for useful energy of unit GDP, the annual growth rate of energy efficiency, and the annual decline rate of CO2 emission factors of per unit of energy consumption, we have:
γ:2.3%
3%
−1%
the same period, the GDP growth rate of Annex I countries still maintains at 2.3 per cent which is the growth rate of 1990 to 2005, the growth rate of their carbon productivity should be 4.6 per cent, which is much higher than the 2.0 per cent growth rate of 1990 to 2005. As we can see from Fig. 3, this assumed 4.6 per cent annual growth rate is only roughly the same as the 4.8 per cent annual growth rate of China in the same period. In light of carbon productivity increment, compared with developed countries, now and in the future China can make considerable and comparable efforts and achievement.
GDP Growth rate 4.6%
Pc (1 y )
U (1 P) I u (1 O) I ec (1 v)
(4)
i.e.
J
O P v Ov 1 O v Ov
(5)
J | O P If vJ(λO| O v (1O 1) the denominator into power 1Pvand v) 1,vexpand series and leave out the second order small quantity, then Fig. 3 Comparison between China’s annual growth rate of carthere is: bon productivity and that of Annex I countries −4%
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Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
J | O P v (O v 1)
(6)
That is to say the annual growth rate of carbon productivity is the result of summing up the annual decline rate of the demand for useful energy of unit GDP, the annual growth rate of energy efficiency, and the annual decline rate of CO2 emission factors of per unit of energy consumption. Formula (6) indicates the factor decomposition on enhancing carbon productivity; the first item at its right side reflects the contribution of structural energy saving, such as the adjustment of economic structure and the increase rate of added value of products; the second item reflects the contribution of enhancing the energy technology efficiency; the third item reflects the contribution of optimizing the energy structure. It should be noted that the above analysis has not yet taken CO2 capture and storage (CCS) technology into account.
3.2 Way of enhancing future carbon productivity of China and its contribution rate According to the analysis in the second part, in the period from 2005 to 2020, China’s carbon productivity can reach 4.8 per cent; the CO2 emission factors of unit energy consumption can be reduced from 0.63 kgC /kgCE to 0.55 kgC /kgCE, the annual decline rate of it is 0.9 per cent, and its contribution rate to the increase of carbon productivity is 19 per cent. According to estimation, the efficiency of energy system is about 35 per cent in 2005, and it will be 41 Emission reduction caused by structural energy saving Emission reduction caused by the imrovement of energy technology Emission reduction caused by the change of carbon emission factors of energy consumption The carbon emission caused by the policies addressing climate change billion tons of CO2 20 18 16 14 12 10 8 6 4 2 0 2005
2020
Fig. 4 Factor decomposition on the way of improving carbon productivity in China
per cent in 2020; the annual growth rate of it is 1.1 per cent, and its contribution rate to the increase of carbon productivity will be 23 per cent. So as Fig. 4 depicts that the annual decline rate of the demand for useful energy, caused by measures of industrial energy saving including the adjustment of industrial structure and the increase of the added value of products, will be 2.8 per cent, and the contribution rate of it to the increase of carbon productivity will reach 58 per cent. Thus, the primary factors that influence the annual growth rate of carbon productivity are the transformation of economic development mode and social consumption patterns. Therefore, we must continue to actively adjust the industrial structure, strive to develop high-tech industries and modern service industry, increase the rate of added value of products, effectively reduce the demand of per unit of GDP for energy services, and substantially achieve the structural energy saving.
4 Conclusions and suggestions 4.1 Conclusions With the continuing development of world economy and society, the greenhouse gas emission is in an upward trend. Even the developed countries have not effectively curbed the greenhouse gas emission. Economic development and greenhouse gas emission are in sharp contradiction. The way out is to strengthen the technology innovation, develop low-carbon technology, transform the economic development mode and social consumption patterns, and develop low-carbon economy, which are fundamental ways to coordinate economic and social development and to protect the global climate, and which are also the strategic focuses of the majority of countries to address climate change. The core of developing low-carbon economy is to increase carbon productivity. In 2050, the world GDP will be about 4 times of now. If at that time the greenhouse gas emission can be reduced by 50 per cent (equivalent to restraining the temperature rise by 2°C and achieving a stable goal of 450 ppmCO2 e), the carbon productivity must be increased by eight times, and the annual growth rate of it should be 4.7 per cent; if at that time the level of greenhouse gas emission is roughly equal to that of now (equivalent to restraining the temperature rise by 3°C and achieving a stable goal of 550 ppmCO2 e), the carbon productivity must be increased by four times, and the annual growth rate
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Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
of it should be 3.1 per cent; however, in the period from 1990 to 2005, the global annual rate of carbon productivity growth is only 1.34 per cent, and as for Annex I countries, it is only 1.95 per cent. Therefore, under the framework of sustainable development and in order to control the greenhouse gas concentration in the atmosphere, all countries should substantially increase carbon productivity. The annual growth rate of carbon productivity can be approximately expressed as the result of summing up the annual GDP growth rate and the annual reduction rate of carbon dioxide emission. In the industrialization stage, the GDP growth rate of emerging developing countries is high; then the increase of carbon productivity should first offset or partially offset the newly increased carbon emission caused by economic development, but in most of the cases, the carbon emission will moderately increase, so it is a relative carbon emission reduction. The GDP growth rate of developed countries is relatively low; the increase of carbon productivity is mainly to reduce the carbon emission caused by the current high consumption; it should be an absolute and significant carbon emission reduction. The annual growth rate of carbon productivity can be used as an important indicator to weigh the efforts that a country makes to address global climate change and the effect of these efforts. This indicator also reflects the characteristics of countries in different development stages, and also reflects the differences on the focuses, difficulties and measures upon the policies addressing global climate change. Many fundamental measures can be taken to increase carbon productivity. First, it is to transform the development mode and consumption pattern, and reduce the demand of economic and social development for energy services. Second, it is to increase the efficiency of energy conversion and utilization, and save energy. Third, it is to develop renewable energy and carbon-free or low-carbon energy, such as nuclear energy and natural gas, and reduce the CO2 emission factors of per unit of energy consumption. The quantitative analysis of these factors indicates that, in addition to technical factors, the transformation of economic development mode and social consumption pattern will still play an active and important role upon increasing carbon productivity. The current carbon productivity of China is low, which reflects the national condition and the characteristics of the development stage of China. However, the carbon produc-
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tivity of China increases quickly. Developing low-carbon economy and enhancing carbon productivity are not only the main measures for China to address climate change, but also the internal demand for building a resource-saving and environment-friendly society and promote the sustainable development. According to the analysis of this paper, in the period from 2005 to 2020, the increase of carbon productivity of China will be equivalent to the 30 per cent goal of carbon emission reduction of Annex I countries, which reflects the efforts and effect of China addressing climate change.
4.2 Suggestions Achieve common understanding that enhancing carbon productivity is the core of the strategy for China to address climate change, that the thought and measures of developing low-carbon economy should be included in the outline of the national and regional twelfth five-year plan for economic and social development, that the concept of low-carbon development should be highlighted, and that enhancing carbon productivity should be the fundamental way of coordinating economic development and addressing climate change. Identify the key areas of enhancing carbon productivity and achieve low-carbon development, and make arrangements ahead of schedule. The specific content includes transforming economic development mode, promoting the strategic adjustment on industrial structure, developing high-tech industry and modern service industry, strengthening the research and development and industrialization of new energy and renewable energy, optimizing the energy structure, vigorously promoting energy conservation, eliminating backward production capacity, paying close attention to the energy-saving and making of energy efficiency standards of key energy-intensive industries, supporting the conscious action of enterprises and the public, and advocating low-carbon production mode and consumption pattern. Improve laws, regulations and policy security system, and set up incentive mechanism. On the basis of the current policy system and working mechanism on carbon emission and energy saving, we should improve the policy system that can promote low-carbon development, such as the taxation and financial policy system, set up a regional or industrial evaluation system for low-carbon develop-
Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
ment, take the increase of carbon productivity as an important indicator for regional and industrial sustainable development, and establish relevant monitoring and evaluation mechanisms. Follow the world trend of low-carbon development and enhance competitiveness. With enhancing carbon productivity at the core, addressing climate change has triggered a new technical and economic competition, and the mastery of advanced energy technology has become a manifestation of national core competitiveness. Currently, the major developed countries regard the development of new energy resources not only as an important area for dealing with financial crisis and achieving “green recovery”, but also as a key strategy to address climate change. China should seize the opportunity, cultivate a competitive advantage in the low-carbon field, and achieve leap-forward development.
Blair T, and the Climate Group, 2008. Breaking the climate deadlock: a global deal for our low-carbon future, report submitted to the G8 Hokkaido Toyako Summit. http://www.cop15.dk/NR/ rdonlyres/64EB28CF-9665-4345-AB53-46BC63BA1E02/0/A Global Deal for Our Low Carbon Future. pdf, Nov. 2008 Chinese Government, 2008. China’s policies and actions on addressing climate change. http://www.ccchina.gov.cn/ He J K and Liu B, 2005. Deal with challenges of climate change under the framework of sustainable development. Environmental Protection, (2): 16 – 19 He J K, Deng J, Su M S, 2009. CO2 Emission from China energy sector and its control strategy. energy, Special Issue on Sustainable Energy Development in China, 1 – 5 He J K, Liu B, Chen Y, et al, 2007. The socio-economic evaluation on Climate Change Mitigation.. compiling group for national assessment report of climate change. National Assessment Report of Climate Change. Beijing: Science Press. 311 – 415 International Energy Agency, 2008. International energy agency database. http://www.iea.org/
Foundation: Major Project of Key Research Bases of Humanities and Social Sciences of Ministry of Education (05JJD630035); Major International Joint Research Program Founded by National Natural Science Foundation of China ( 50246003); Major Project (90410016).
Kaya Y, and Yokobori K, 1999. Environment, energy and economy: strategies for sustainability. Delhi: Bookwell Publications Solomon S, et al, 2007. Climate change 2007: the physical science basis: contribution of working group i to the fourth assessment report of the intergovernmental panel on climate change. New
References Beinhocker, E, Oppenheim, J, Irons, B, et al, 2008. The carbon productivity challenge: curbing climate change and sustaining economic growth. http://www.mckinsey.com/mgi
York: Cambridge University Press. 95 – 844 United Nations Climate Change Secretariat, 2008. United Nations framework convention on climate change. http://www.unfccc.int/ United Nations Climate Change Secretariat, 2008. Kyoto Protocol. http://www.unfccc.int.
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Carbon Productivity Analysis to Address Global Climate Change He Jiankun, Su Mingshan Research Center for Contemporary Management, Tsinghua University, Beijing 10084, China
Abstract: Developing low-carbon economy and enhancing carbon productivity are basic approaches to coordinating economic development and protecting global environment, which are also the major ways to address climate change under the framework of sustainable development. In this paper, the authors analyze the annual rate of carbon productivity growth, the differences of carbon productivity of different countries, and the factors for enhancing carbon productivity. Consequently, the authors clarify their viewpoint that the annual rate of carbon productivity growth can be used to weigh the efforts that a country takes to address climate change, and propose policies and suggestions on promoting carbon production.
Key words: carbon productivity, annual rate of carbon productivity growth, global climate change, greenhouse gas reduction
It has been gradually recognized by the scientific community that anthropogenic greenhouse gas emission causes global climate change (Solomon, 2007). The core of dealing with climate change is to reduce anthropogenic greenhouse gas emission, and the key is to reduce fossil fuel consumption and CO2 emission caused by deforestation. Currently, the world economic development, especially the industrialization and urbanization of developing countries, consumes much fossil fuel and discharge a large amount of CO2, which is in sharp contradiction to the objectives of addressing global climate change. The fundamental way of coordinating economic development and protecting the climate lies in technological innovation, developing low-carbon energy technologies, transforming economic development mode, and developing low-carbon economy, through which we can achieve the objectives of sustainable development and win-win goals, such as promoting economic development, social progress and environmental protection.
1 The analysis on the rate of carbon productivity growth The core of a low-carbon economy is to raise carbon
productivity. When the situation of dealing with global climate change is increasingly urgent, the carbon emission space has become a more scarce production factor than labor force, capital, land and other natural resources. A substantial increase in carbon productivity has become a key to address global climate change under the framework of sustainable development.
1.1 Theoretical analysis on the rate of carbon productivity growth Carbon productivity is defined as the specific value of Gross Domestic Product (GDP) to carbon dioxide emission over the same period, and it is equal to the reciprocal of carbon emission intensity of per unit of GDP (Kaya and Yokobori, 1999), and it reflects the economic benefits yielding from per unit of carbon dioxide emission. The rate of carbon productivity growth can be used to weigh the efforts that a country or region takes to address climate change and the effect of these efforts (He, et al, 2009). The concept of carbon productivity was put forward by the Kaya and Yokobori in 1993 (Kaya and Yokobori, 1999). In recent years, many researchers are concerned with the relationship between the total carbon dioxide emission and carbon productivity. Beinhocker and other researchers have studied the growth of carbon productivity in order to achieve the goal that, in 2050, carbon dioxide emission can decrease by 50% of 2005 (Beinhocker, et al, 2008). Based on the analysis on carbon productivity and other factors, Blair and the Climate Group put forward some suggestions to deal with the predicament of addressing the global climate change (Blair and the Climate Group, 2008). Under the framework of sustainable development, the key of addressing climate change is to increase carbon productivity, i.e. the annual rate of carbon productivity growth, which is regarded as an important factor weighing the efforts that a country or a region makes to deal with climate change and the effect of these efforts. The annual rate of carbon productivity (γ) can be defined with the following
Received 24 November 2010; accepted 7 December 2010 Corresponding author: He Jiankun (hejk@mail. tsinghua. edu. cn)
Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
velopment.
formula:
J
'Pc Pc
ª Y (1 D ) Y º « Q(1 E ) Q » ¬ ¼
Y Q
(1)
In this formula, ΔPc refers to the increment of carbon productivity of a certain year; Pc stands for the carbon productivity of the previous year; Y represents the GDP of the previous year; Q is the quantity of carbon dioxide emission of the previous year; α is the annual growth rate of GDP to the previous year; β stands for the rate of carbon emission reduction of the year. Because the rate of carbon emission reduction of two adjacent years is only several per cent and it is far smaller than 1, according to formula (1), we have:
J
DE |D E 1 E
(2)
Under normal circumstances, the annual rate of carbon productivity growth can be expressed as the result of summing up the growth rate of GDP and the annual rate of carbon emission reduction, as we can see from formula (2). The economics implication of it is to reduce carbon dioxide emission by advancing carbon productivity; the annual rate of carbon productivity growth shall first offset the increase of carbon dioxide emission caused by GDP growth and then reduce the current level of carbon dioxide emission (He, et al, 2009). According to the previous economics implication, because developing countries and developed countries are in different development stages, they have different problems, difficulties, priorities and measures upon addressing climate change. Newly emerging developing countries are in the rapid development stages of industrialization and urbanization and their GDP grows at a faster rate, so the increase of their carbon productivity should first offset or relieve the carbon dioxide emission caused by new energy demand because of the rapid economic development. The main measures of it are to transform the economic development mode, strengthen technical innovation, and develop low-carbon economy. As for developed countries, they have a high level of economic development and per capita energy consumption and their GDP growth rate is low, so the increase of their carbon productivity should mainly reduce the current high level of carbon dioxide emission. The measure of it is to change their luxury consumption patterns and thus significantly reduce their carbon dioxide emission, when ensuring a high economic and social de-
10
1.2 Empirical analysis on the rate of carbon productivity growth Based on the theoretical analysis on the rate of carbon productivity growth, we calculate and analyze the data of China and that of Annex I countries from 1990 to 2005. In the calculation process, we adopt the data from IEA database (International Energy Agency, 2008). Fig. 1 compares the annual rate of carbon productivity growth of China from 1990 to 2005 and that of countries listed in the Annex I of Global Framework Convention on Climate Change (United Nations Climate Change Secretariat, 2008). Calculating on the data from IEA database (International Energy Agency, 2008), the annual rate of carbon productivity of China from 1990 to 2005 is as high as 4.6%, but due to a rapid growth rate of GDP, which is about 10.1% on average, the carbon dioxide emission increases by 5.4% on average. In the same period, the annual rate of carbon productivity growth of countries listed in Annex I is 2.0%, and their annual growth rate of GDP is 2.3% on average, so the carbon productivity is not enough to offset the increased carbon emission caused by economic development, and the carbon dioxide emission of energy consumption still increase at an annual average rate of 0.3%. The carbon emission reduction of developed countries is still far from the objectives stipulated in Kyoto Protocol (United Nations Climate Change Secretariat, 2008). Developed countries should first significantly reduce their carbon emissions according to the requirements stipulated in United Nations Framework Convention on Climate Change and Kyoto Protocol. Therefore, their carbon productivity must be enhanced significantly. 6% 4% γ:4.6%
2% 0% −2% −4%
GDP Growth rate 10.1%
GDP Growth rate 2.3%
γ:2.0% China
Annex I Countries CO2Emission Reduction rate −5.4%
CO2Emission Reduction rate −0.2%
−6%
Fig. 1 Comparison between China’s carbon productivity and that of Annex I countries from 1990 to 2005
Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011
2 Comparative analysis on carbon productivity of different countries 2.1 Factor analysis on carbon productivity Generally speaking, the level of carbon productivity of a country is closely related to its degree of modernization, and the level of carbon productivity of most developing countries is lower than that of developed countries. Fig. 2 depicts that in 2005, the carbon productivity of India, Brazil and China is significantly lower than that of Japan, Britain and Germany. In 2005, the carbon productivity of China is only one fifth of the average level of Annex I countries, and one twelfth of that of Japan, which is a comprehensive reflection of a series of factors that China’s overall level of energy technology is relatively low, that China is at the low-end of international industry value chain, and that the proportion of heavy chemical industry is rather high. For developing countries that are in the stage of industrialization and urbanization, these factors can hardly be shaken off in a short period of time. 2005 Carbon productivity (year of 2000 $/kg CO2) 1990-2005 Average rate of carbon productivity growth
5%
5
4%
4
3%
3
2% 1%
2
0%
1 0
−1% China
Brazil
Japan
India
Britain
U.S.A.
−2% Germany Whole World
Fig. 2 Comparison of some countries’ carbon productivity and the comparison of some countries’ annual rate of carbon productivity from 1990 to 2005
The carbon productivity of China is far lower than that of developed countries, which is closely related to the characteristics of China’s national condition and development stage. Many factors contribute to this condition. Firstly, in China’s industrial structure, the secondary industry accounts for as much as 50 per cent and the tertiary industry accounts for only 40%; while in developed countries, the percentage of the secondary industry is less than 30, and the tertiary industry accounts for as much as 70 per cent; the energy consumption of per unit of added value of the secondary industry is much higher than that of the tertiary industry. Secondly, the rate of added value
of products in manufacturing industry is relatively low. According to calculation, the rate of added value of products in China is lower than that in developed countries by about 20 per cent. In China, low-end products take up a bigger proportion and the energy consumption of per unit of added value is high. Thirdly, the unit consumption of energy for major energy-consuming products in China is higher than that in developed countries by 15 to 30 per cent; the rate of energy conversion and utilization in China is lower than that in developed countries by more than 20 per cent. Fourthly, the energy structure of China is coal-dominated; the carbon dioxide emission factors of unit energy consumption in China are higher than that in developed countries by one third. In the above mentioned factors that result in a lower carbon productivity in China than that in developed countries, the influence of technological gap is much smaller than that of structural factors which reflect the characteristics of the development stage. Obviously, on one hand, China has great potential in improving her carbon productivity; on the other hand, there is still a long way to go for China to reach the level of carbon productivity of developed countries, which is the same with the fact that narrowing the gap with developed countries on economic development is a long and arduous task for China. Although China’s carbon productivity is low, yet her average annual rate of carbon productivity growth is far higher than that of developed countries (See Fig. 2). Meanwhile, from 1990 to 2005, the annual growth rate of China’s carbon productivity not only is higher than that of some newly emerged economic entities, such as India and Brazil, but also is obviously higher than the average level of the world, which is also a reflection of the results of her long-term strategies on sustainable development. Developing low-carbon economy and substantially increasing the carbon productivity is the key for China to coordinate economic development and the climate change, is the internal demand for China to solve the bottleneck restrict on energy resources and domestic environmental capacity, to ensure energy supply security, and to achieve a cohesive and sustainable development on energy, environment and economy, and is a strong driving force for China to fundamentally transform her economic development mode. The policies on addressing climate change, with increasing carbon productivity at the core, are consistent with China’s basic national policies on the conservation of resources and environmental protection, and they
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also fit into China’s objectives on building a resourcesaving and environment-friendly society. So far, China has made great efforts on addressing climate change, which is a concrete exhibition of China as a responsible country, and which has also been praised by the international community.
2.2 Development momentum of carbon productivity According to China’s actual situation and the world situation to address global climate change, China has developed strategies to address climate change under the framework of sustainable development (Chinese Government, 2008; He and Liu, 2005; He, et al, 2007 ). In the future, China will make further efforts to deal with climate change, and will achieve remarkable results. In He, et al (2009), the scenario analysis on future economic development and energy consumption and CO2 emissions shows that, from 2005 to 2020, the growth rate of carbon productivity will reach 4.8 per cent, and approximately the growth rate of 2020 will be two times of that of 2005. The GDP will remain at a high growth rate of 7.8 per cent, the annual growth rate of CO2 emission will reach 3.0 percent, but the growth rate of CO2 emission will be less than 40 per cent of GDP growth rate. To achieve the goal of controlling global greenhouse gas intensity, in the second commitment period after 2012, developed countries must significantly reduce their carbon emission. World public opinion requires that, by 2020, Annex I countries should reduce their carbon emission by at least 25 to 40 per cent of 1990. If, by 2020, the Annex I countries reduce their carbon emission by 30 per cent of 2005, if their annual reduction rate is 2.3 per cent, and if, in 6% 5% 4% γ:4.8%
2%
GDP Growth rate 1% 7.8% 0%
−2% −3%
3 Factor decomposition on the way of enhancing carbon productivity and the estimation on the contribution rate of different factors 3.1 Factor decomposition on the way of enhancing carbon productivity The major way of enhancing carbon productivity is to transform the economic development mode, enhance energy efficiency and develop low-carbon energy technology. According to the definition of carbon productivity, we have: Pc
CO2 Emission Reduction rate 2.3% China
Annex I Countries CO2 Emission Reduction rate −2.4%
1 I gc I ec
U I u I ec
(3)
In this formula, Igc equals to Iu/ρ, and it is the energy intensity of per unit of GDP; Iu refers to the useful energy demand of per unit of GDP; ρ stands for the effectiveness of energy system; Iec refers to the CO2 emission factors of per unit of energy consumption; if λ, μ and ν respectively represent the annual decline rate of the demand for useful energy of unit GDP, the annual growth rate of energy efficiency, and the annual decline rate of CO2 emission factors of per unit of energy consumption, we have:
γ:2.3%
3%
−1%
the same period, the GDP growth rate of Annex I countries still maintains at 2.3 per cent which is the growth rate of 1990 to 2005, the growth rate of their carbon productivity should be 4.6 per cent, which is much higher than the 2.0 per cent growth rate of 1990 to 2005. As we can see from Fig. 3, this assumed 4.6 per cent annual growth rate is only roughly the same as the 4.8 per cent annual growth rate of China in the same period. In light of carbon productivity increment, compared with developed countries, now and in the future China can make considerable and comparable efforts and achievement.
GDP Growth rate 4.6%
Pc (1 y )
U (1 P) I u (1 O) I ec (1 v)
(4)
i.e.
J
O P v Ov 1 O v Ov
(5)
J | O P If vJ(λO| O v (1O 1) the denominator into power 1Pvand v) 1,vexpand series and leave out the second order small quantity, then Fig. 3 Comparison between China’s annual growth rate of carthere is: bon productivity and that of Annex I countries −4%
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J | O P v (O v 1)
(6)
That is to say the annual growth rate of carbon productivity is the result of summing up the annual decline rate of the demand for useful energy of unit GDP, the annual growth rate of energy efficiency, and the annual decline rate of CO2 emission factors of per unit of energy consumption. Formula (6) indicates the factor decomposition on enhancing carbon productivity; the first item at its right side reflects the contribution of structural energy saving, such as the adjustment of economic structure and the increase rate of added value of products; the second item reflects the contribution of enhancing the energy technology efficiency; the third item reflects the contribution of optimizing the energy structure. It should be noted that the above analysis has not yet taken CO2 capture and storage (CCS) technology into account.
3.2 Way of enhancing future carbon productivity of China and its contribution rate According to the analysis in the second part, in the period from 2005 to 2020, China’s carbon productivity can reach 4.8 per cent; the CO2 emission factors of unit energy consumption can be reduced from 0.63 kgC /kgCE to 0.55 kgC /kgCE, the annual decline rate of it is 0.9 per cent, and its contribution rate to the increase of carbon productivity is 19 per cent. According to estimation, the efficiency of energy system is about 35 per cent in 2005, and it will be 41 Emission reduction caused by structural energy saving Emission reduction caused by the imrovement of energy technology Emission reduction caused by the change of carbon emission factors of energy consumption The carbon emission caused by the policies addressing climate change billion tons of CO2 20 18 16 14 12 10 8 6 4 2 0 2005
2020
Fig. 4 Factor decomposition on the way of improving carbon productivity in China
per cent in 2020; the annual growth rate of it is 1.1 per cent, and its contribution rate to the increase of carbon productivity will be 23 per cent. So as Fig. 4 depicts that the annual decline rate of the demand for useful energy, caused by measures of industrial energy saving including the adjustment of industrial structure and the increase of the added value of products, will be 2.8 per cent, and the contribution rate of it to the increase of carbon productivity will reach 58 per cent. Thus, the primary factors that influence the annual growth rate of carbon productivity are the transformation of economic development mode and social consumption patterns. Therefore, we must continue to actively adjust the industrial structure, strive to develop high-tech industries and modern service industry, increase the rate of added value of products, effectively reduce the demand of per unit of GDP for energy services, and substantially achieve the structural energy saving.
4 Conclusions and suggestions 4.1 Conclusions With the continuing development of world economy and society, the greenhouse gas emission is in an upward trend. Even the developed countries have not effectively curbed the greenhouse gas emission. Economic development and greenhouse gas emission are in sharp contradiction. The way out is to strengthen the technology innovation, develop low-carbon technology, transform the economic development mode and social consumption patterns, and develop low-carbon economy, which are fundamental ways to coordinate economic and social development and to protect the global climate, and which are also the strategic focuses of the majority of countries to address climate change. The core of developing low-carbon economy is to increase carbon productivity. In 2050, the world GDP will be about 4 times of now. If at that time the greenhouse gas emission can be reduced by 50 per cent (equivalent to restraining the temperature rise by 2°C and achieving a stable goal of 450 ppmCO2 e), the carbon productivity must be increased by eight times, and the annual growth rate of it should be 4.7 per cent; if at that time the level of greenhouse gas emission is roughly equal to that of now (equivalent to restraining the temperature rise by 3°C and achieving a stable goal of 550 ppmCO2 e), the carbon productivity must be increased by four times, and the annual growth rate
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of it should be 3.1 per cent; however, in the period from 1990 to 2005, the global annual rate of carbon productivity growth is only 1.34 per cent, and as for Annex I countries, it is only 1.95 per cent. Therefore, under the framework of sustainable development and in order to control the greenhouse gas concentration in the atmosphere, all countries should substantially increase carbon productivity. The annual growth rate of carbon productivity can be approximately expressed as the result of summing up the annual GDP growth rate and the annual reduction rate of carbon dioxide emission. In the industrialization stage, the GDP growth rate of emerging developing countries is high; then the increase of carbon productivity should first offset or partially offset the newly increased carbon emission caused by economic development, but in most of the cases, the carbon emission will moderately increase, so it is a relative carbon emission reduction. The GDP growth rate of developed countries is relatively low; the increase of carbon productivity is mainly to reduce the carbon emission caused by the current high consumption; it should be an absolute and significant carbon emission reduction. The annual growth rate of carbon productivity can be used as an important indicator to weigh the efforts that a country makes to address global climate change and the effect of these efforts. This indicator also reflects the characteristics of countries in different development stages, and also reflects the differences on the focuses, difficulties and measures upon the policies addressing global climate change. Many fundamental measures can be taken to increase carbon productivity. First, it is to transform the development mode and consumption pattern, and reduce the demand of economic and social development for energy services. Second, it is to increase the efficiency of energy conversion and utilization, and save energy. Third, it is to develop renewable energy and carbon-free or low-carbon energy, such as nuclear energy and natural gas, and reduce the CO2 emission factors of per unit of energy consumption. The quantitative analysis of these factors indicates that, in addition to technical factors, the transformation of economic development mode and social consumption pattern will still play an active and important role upon increasing carbon productivity. The current carbon productivity of China is low, which reflects the national condition and the characteristics of the development stage of China. However, the carbon produc-
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tivity of China increases quickly. Developing low-carbon economy and enhancing carbon productivity are not only the main measures for China to address climate change, but also the internal demand for building a resource-saving and environment-friendly society and promote the sustainable development. According to the analysis of this paper, in the period from 2005 to 2020, the increase of carbon productivity of China will be equivalent to the 30 per cent goal of carbon emission reduction of Annex I countries, which reflects the efforts and effect of China addressing climate change.
4.2 Suggestions Achieve common understanding that enhancing carbon productivity is the core of the strategy for China to address climate change, that the thought and measures of developing low-carbon economy should be included in the outline of the national and regional twelfth five-year plan for economic and social development, that the concept of low-carbon development should be highlighted, and that enhancing carbon productivity should be the fundamental way of coordinating economic development and addressing climate change. Identify the key areas of enhancing carbon productivity and achieve low-carbon development, and make arrangements ahead of schedule. The specific content includes transforming economic development mode, promoting the strategic adjustment on industrial structure, developing high-tech industry and modern service industry, strengthening the research and development and industrialization of new energy and renewable energy, optimizing the energy structure, vigorously promoting energy conservation, eliminating backward production capacity, paying close attention to the energy-saving and making of energy efficiency standards of key energy-intensive industries, supporting the conscious action of enterprises and the public, and advocating low-carbon production mode and consumption pattern. Improve laws, regulations and policy security system, and set up incentive mechanism. On the basis of the current policy system and working mechanism on carbon emission and energy saving, we should improve the policy system that can promote low-carbon development, such as the taxation and financial policy system, set up a regional or industrial evaluation system for low-carbon develop-
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ment, take the increase of carbon productivity as an important indicator for regional and industrial sustainable development, and establish relevant monitoring and evaluation mechanisms. Follow the world trend of low-carbon development and enhance competitiveness. With enhancing carbon productivity at the core, addressing climate change has triggered a new technical and economic competition, and the mastery of advanced energy technology has become a manifestation of national core competitiveness. Currently, the major developed countries regard the development of new energy resources not only as an important area for dealing with financial crisis and achieving “green recovery”, but also as a key strategy to address climate change. China should seize the opportunity, cultivate a competitive advantage in the low-carbon field, and achieve leap-forward development.
Blair T, and the Climate Group, 2008. Breaking the climate deadlock: a global deal for our low-carbon future, report submitted to the G8 Hokkaido Toyako Summit. http://www.cop15.dk/NR/ rdonlyres/64EB28CF-9665-4345-AB53-46BC63BA1E02/0/A Global Deal for Our Low Carbon Future. pdf, Nov. 2008 Chinese Government, 2008. China’s policies and actions on addressing climate change. http://www.ccchina.gov.cn/ He J K and Liu B, 2005. Deal with challenges of climate change under the framework of sustainable development. Environmental Protection, (2): 16 – 19 He J K, Deng J, Su M S, 2009. CO2 Emission from China energy sector and its control strategy. energy, Special Issue on Sustainable Energy Development in China, 1 – 5 He J K, Liu B, Chen Y, et al, 2007. The socio-economic evaluation on Climate Change Mitigation.. compiling group for national assessment report of climate change. National Assessment Report of Climate Change. Beijing: Science Press. 311 – 415 International Energy Agency, 2008. International energy agency database. http://www.iea.org/
Foundation: Major Project of Key Research Bases of Humanities and Social Sciences of Ministry of Education (05JJD630035); Major International Joint Research Program Founded by National Natural Science Foundation of China ( 50246003); Major Project (90410016).
Kaya Y, and Yokobori K, 1999. Environment, energy and economy: strategies for sustainability. Delhi: Bookwell Publications Solomon S, et al, 2007. Climate change 2007: the physical science basis: contribution of working group i to the fourth assessment report of the intergovernmental panel on climate change. New
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York: Cambridge University Press. 95 – 844 United Nations Climate Change Secretariat, 2008. United Nations framework convention on climate change. http://www.unfccc.int/ United Nations Climate Change Secretariat, 2008. Kyoto Protocol. http://www.unfccc.int.
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